Bearish or Bullish : Still Unpredictable

Stock market runs on two things - fear and greed and once again the volatile scenario in the Indian stock markets has forced the investors to give a food of thought that what to do now. Should they wait for the market to get stable or use this as an opprtunity to invest more and increase their stocks in their portfolio?

 

The BSE Sensex shed over 150 points on Thursday as investors shift their focus to a government share sale in Oil and Natural Gas Corp aiming to raise at least USD 2.5 billion. The 30-share index, which had gained 550 points in the last two trading sessions to trade above 18,000 points has now again surges to 150 points.

 

Brokers said sustained buying by funds and retail investors amid a firming trend in other Asian markets, following overnight gains in the US markets, bolstered trading sentiment. 

 

Still the market signals a buying opportunity as we haven't seen any significant bounce backs in the markets. However, the rally is bullish and what is fueling the rally is the capital infusion in the market. In the past two months, Indian markets has witnessed FII purchases of nearly $5 billion and not only this, there is a positive signs seen on the domestic front also as RBI has discussed to follow an easy monetary policy and are expected to cut CRR by 50 bps and policy rates by 25 bps.

 

It was a correction that everyone was aware of but that too can be a bigger one if the Euro debt crisis accelerates or crude oil prices goes up sharply. It was a volatile session of trade on Dalal Street as indices were disappointed by weak GDP data. Capital goods index were the biggest draggers. Banks and autos too fuelled the slide.

 

In the current scenario, as the UP poll results are expected to come in March, so it is assumed that March will be a volatile month.

 

However, the only hope for the market to see some upside will be if the UP election results are favourable.

 

"After a disappointing year of 2011, Indian Capital Markets witnessed a surprising rally from the lows of 4530 to the highs of 5630 in the month of January – February 2012.The rally was so steep and so fast that didn't give much time for the local investors to participate in the rally. However Nifty took a brief correction after touching the 5600 levels to the levels of 5268, giving another buying opportunity to its investors." says Shanu Goel, Senior Research Analyst, Bonanza Portfolio Limited.

 

"Broadly speaking market is going to remain highly volatile in the month of March, with events like UP Elections results, RBI’s policy and the Union Budget. As per the anticipations, the outcome of these developments will act as a positive trigger going forward which would take the Nifty again near its previous highs in the second half of the year 2012" he added.

 

"Looking at the current valuations and the prospective opportunities, Investors should put their money in interest rate sensitive sectors with the hope of cut in Interest rate in the coming policies. At the major support level, they can buy stocks which are parallel to index. Along with Banking, IT and beaten down capital goods will give good return in the near future" says Shrikant Chouhan, Head Technical Research, Kotak Securities. 

 

"Whether the markets are bottomed out or not, it is very difficult to say. The uncertainlity is there no doubt.But the way the investors have parked money in the Indian markets so that means they might be expecting something good from the market" he added.